eBay (Ebay) reported second-quarter revenues down from the year-ago quarter, but profits were flat year-over-year. The slowdown is expected to continue in the third quarter, with the e-commerce giant forecasting lower revenue.
However, the company delivered better-than-expected results in the second quarter. As a result, his stock rose just over 4%, and on August 3, 2022, he closed at $50.48.
Second Quarter Earnings Snapshot
Revenue for the quarter was $2.4 billion, down 9% from the year-ago quarter. However, he slightly exceeded analyst expectations of $2.37 billion. The decrease was driven by gross merchandise volume (GMV) of $18.5 billion, down 18% from the year-ago quarter. Advertising services generated his $275 million in revenue, representing 1.5% of GMV.
eBay’s diluted earnings per share (EPS) was $0.99, flat compared to the year-ago quarter. However, the figure beat consensus expectations of $0.91 per share.
eBay returned $1.4 billion to shareholders during the quarter. This consisted of a $1.3 billion share buyback and his $121 million cash dividend.
The Board of Directors has declared a cash dividend of $0.22 per share on September 16, 2022 to shareholders of record as of September 1, 2022.
eBay also sold a portion of its Kakao Bank stake for $242 million and a portion of Adyen’s stake for $129 million. It also acquired KnownOrigin, expanding its footprint into the non-fungible token market.
eBay lowers third quarter and full year earnings
eBay expects third-quarter revenue to be in the range of $2.29 billion to $2.37 billion, down 5% to 2% from the same period last year. Diluted earnings per share (EPS) is expected to be in the range of $0.89 to $0.95.
Full-year revenues are expected to be in the range of $9.6 billion to $9.9 billion, down 6% to 3% from the prior year period. Diluted EPS for the full year is expected to be in the range of $3.95 to $4.10.
CEO Jamie Lannone argues that the results support solid progress on the long-term initiative, despite lower revenue and total product volumes.
Declining website traffic predicted weaker results
If you’re a TipRanks user with a website traffic screener, eBay’s poor performance shouldn’t surprise you. eBay’s quarterly decline in website traffic already signals a weak second quarter.
According to the tool, eBay’s website recorded a 3.79% quarter-on-quarter decline in global visitor numbers to 705.64 million in the second quarter compared to the previous quarter. Additionally, year-to-date, eBay website traffic decreased by 18.52% compared to the same period last year.
The decline in online activity suggests the company is slowing down in some way.
See how website traffic can help you research your favorite stocks.
Do you expect eBay’s stock price to rise?
Well, Street sits on the fence with a consensus rating of holds based on 8 buys, 14 holds, and 2 cells. However, eBay’s average price target is $53.24, which means it could go up 5.5% from current levels. Therefore, we can safely assume that EBAY’s share price has the expected upside.
Important points for investors
Based on Q2 earnings and lower GMV, eBay appears to be in a slow growth phase. The company’s lower guidance for the third quarter and full year suggests the slowdown will continue into the second half of 2022.
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